Abstract

http://ssrn.com/abstract=2175766
 


 



Beneficial Ownership and the REMIC Classification Rules


Bradley T. Borden


Brooklyn Law School

David J. Reiss


Brooklyn Law School

November 14, 2012

Bloomberg BNA Tax Management Real Estate Journal, November 2012
Brooklyn Law School, Legal Studies Paper No. 315

Abstract:     
REMICs are securitized pools of mortgages that qualify for special flow-through taxation. To qualify for flow-through tax treatment, the pool must satisfy several requirements. An intended REMIC that fails to satisfy those requirements will likely be taxed as a corporation and payments made to holders of interests in a failed REMIC will likely be nondeductible dividend payments, subjecting the REMIC to significant tax and penalties. Such tax and penalties will cause beneficial interests in the pool to lose value and frustrate investors who relied upon REMIC classification as an incentive to purchase interests. Thus, tax classification is critical to REMICs and their investors. Nonetheless, recent litigation and various media reports suggest that many mortgage pools may not qualify for REMIC classification.

Number of Pages in PDF File: 12

Keywords: mortgage-backed securities, MBS, Real Estate Mortgage Investment Conduit, REMIC, beneficial ownership

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Date posted: November 15, 2012 ; Last revised: December 4, 2012

Suggested Citation

Borden, Bradley T. and Reiss, David J., Beneficial Ownership and the REMIC Classification Rules (November 14, 2012). Bloomberg BNA Tax Management Real Estate Journal, November 2012; Brooklyn Law School, Legal Studies Paper No. 315. Available at SSRN: http://ssrn.com/abstract=2175766

Contact Information

Bradley T. Borden (Contact Author)
Brooklyn Law School ( email )
250 Joralemon Street
Brooklyn, NY 11201
United States

David J. Reiss
Brooklyn Law School ( email )
250 Joralemon Street
Brooklyn, NY 11201
United States

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